JPMorgan report warns: The RWA tokenization market is cooling, with a market capitalization of $25 billion only equivalent to the inflows of US ETFs, and interest from traditional financial institutions is waning.

JPMorgan's latest report points out that the tokenization of real-world assets (RWA) market is performing far below expectations, with a total market capitalization of only $25 billion, which is equivalent to the average weekly inflow scale of U.S. ETFs. More severely, current investments mainly come from crypto-native enterprises, while the participation and interest of traditional financial institutions (TradFi) are sluggish. The report questions the actual demand and market prospects for RWA tokenization, triggering in-depth reflections within the industry on the future direction of blockchain asset securitization.

( The market is cooling: Stagnation in scale and departure of traditional institutions ) J.P. Morgan analyst Nikolaos Panigirtzoglou stated in the report: "The total scale of tokenized assets remains insignificant. This disappointing situation reflects that traditional investors have yet to see its necessity. There is almost no evidence that banks or clients are transitioning from traditional bank deposits to on-chain tokenized bank deposits." Key data from the report reveals:

• Total market capitalization of RWA tokenization is only $25 billion (approximately 180 billion RMB);
• Among them, 15 billion USD is concentrated in tokenization of private credit among a few institutions;
• Traditional Financial Institutions have shown a noticeable decrease in interest in RWA tokenization, with the main investment force still being native crypto enterprises;
• Typical case: The BlackRock BUIDL fund's asset size shrunk by 600 million USD between May and August.

(Sharp Questioning: Tokenization Value Proposition Under Challenge) The report's bearish view on the RWA tokenization market has caused a stir in the industry. Renowned ETF analyst Eric Balchunas echoed JPMorgan's judgment on social media and further questioned the core value of tokenization: "Although I am optimistic about BTC/cryptocurrency ETFs and stablecoins, I am cautious about full tokenization. ETFs are already strong enough, and their value proposition is unmatched. The concept of tokenization has existed for a decade... yet it has never posed a substantial challenge to ETFs. If Wall Street truly believed that tokenizing RWA was the next big trend, we wouldn't see ETF issuance hitting record highs year after year!" Balchunas believes that the development prospects of RWA tokenization may be nearing the end rather than the beginning.

( Potential Impact: Regulatory Blueprint Faces Market Reality Challenges ) If JPMorgan's bearish report is accurate, it could have far-reaching effects on the industry. Currently, the U.S. Securities and Exchange Commission (SEC) is working to promote the blockchainization of capital markets, but weak market data—especially the low participation of Financial Institutions—could undermine the implementation foundation of this regulatory transformation plan. The report warns that institutional willingness to invest in RWA tokenization may further decline, casting a shadow over the path of blockchain asset securitization.

(Dialectical Perspective: Warning Signal or Short-term Pain?) It should be noted that JPMorgan's conclusions may have limitations or biases. Although the bank is deeply involved in research in the RWA field, a single report's viewpoint requires more support from traditional financial institutions to establish industry consensus. The encryption industry should face the issue of weak traditional capital inflows highlighted in the report, but it should also recognize that RWA tokenization, as a key bridge connecting traditional finance and blockchain, may require more time for the full release of its technical advantages (such as improving settlement efficiency, enhancing asset liquidity, and reducing transaction costs) and more robust infrastructure support. Whether the market is truly heading towards "cooling off" still needs to be observed through subsequent institutional participation, the implementation of regulatory frameworks, and breakthroughs in landmark use cases.

Conclusion: RWA Tokenization at a Crossroads J.P. Morgan's report douses cold water on the booming RWA tokenization market, revealing a core contradiction: the enthusiasm of the crypto industry stands in stark contrast to the indifference of Financial Institutions. A total market capitalization of $25 billion indeed seems small in the face of the vast traditional financial market, and the shrinking of BlackRock's BUIDL fund visually reflects the hesitance of institutional funds. However, it may be too early to conclude that RWA tokenization is "coming to an end." The current predicament is more likely due to the immaturity of the market in its early stages, regulatory ambiguity, and the inertia of transformation within the traditional financial system. The core value proposition of RWA — improving efficiency, transparency, and accessibility — remains unchanged. The challenge for the industry lies in how to break out of the early adopter circle, prove its ability to address real pain points to traditional institutions, and promote the synergistic development of regulatory frameworks. RWA tokenization is at a critical validation period, and its future will depend on whether it can truly transition from "hot in the crypto circle" to "use in traditional finance"; J.P. Morgan's warning is precisely a reflection of this transformational growing pain.